Ok, found a solution here:
http://droiddudes.com/2012/07/12/unable-to-create-android-project-in-eclipse-with-adt-20/
Delete Android Support Tools (version 9) from ADK.
Run App wizard again -- it will complete that it requires Version 8 -- confirm you wish to install. Version 9 gets (re)installed. Dialog completes.
Next time you run it there are no errors, and if you look in ADT manager it is in there (again.)
Update: Worked for "test" project then failed for my new real project which has SPACE in the name -- changed the PROJECT NAME (not the app name) to remove the space and the wizard completed correctly.